Road Deaths: U.S. vs. Other Countries

A recent article in the NYTimes noted that traffic fatalities in the US reached the highest in 50 years as more drivers are distracted with smartphone apps. From the article:

The messaging app Snapchat allows motorists to post photos that record the speed of the vehicle. The navigation app Waze rewards drivers with points when they report traffic jams and accidents. Even the game Pokémon Go has drivers searching for virtual creatures on the nation’s highways.

When distracted driving entered the national consciousness a decade ago, the problem was mainly people who made calls or sent texts from their cellphones. The solution then was to introduce new technologies to keep drivers’ hands on the wheel. Innovations since then — car Wi-Fi and a host of new apps — have led to a boom in internet use in vehicles that safety experts say is contributing to a surge in highway deaths.

After steady declines over the last four decades, highway fatalities last year recorded the largest annual percentage increase in 50 years. And the numbers so far this year are even worse. In the first six months of 2016, highway deaths jumped 10.4 percent, to 17,775, from the comparable period of 2015, according to the National Highway Traffic Safety Administration.

“This is a crisis that needs to be addressed now,” Mark R. Rosekind, the head of the agency, said in an interview.

Source: Biggest Spike in Traffic Deaths in 50 Years? Blame Apps by Neal Boudette, Nov 15 2016, NY Times

Globally about 1.2 million people die each year due to road accidents. Some of the countries with lowest road death rates per 100,000 inhabitants are Iceland, Sweden, the UK, Norway and Switzerland while countries like South Africa have some of the highest death rates according to OECD data. Incidentally the U.S. has the highest road deaths among developed countries as shown in the chart below:

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road-deaths-in-select-countries

Source: Road death challenge, OECD Observer

Even before the popularity of apps and internet connectivity in cars, many American drivers were bad drivers than European drivers. Though speed limits are much higher in Europe, drivers there tend to drive more safely and drive better cars. In the US, many drive bigger cars and SUVs that look like military tanks on the road but that does not mean necessarily they are safe drivers.

Blackrock: Why Hold Dividend-Paying Stocks Even When Interest Rates Rise

Interest rates are projected to rise sometime later this year or next year. This has many income investors worried as rising interest rates is not good for income stocks such as utilities. However Richard TurnillBlackRock Global Chief Investment Strategist at Blackrock noted in a blog post that dividend-paying stocks are still preferred to own in a rising interest rate environment since they could earn a positive return over the next five years.

The chart below shows impact of low interest rates on the income generated by a typical portfolio. Equities’ portion of portfolio income produced by a portfolio of 60% stocks and 40$ bonds has steadily increased over the years:

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007493A_BII_chart_Web_V2

Source: Taking stock of income stocks, Richard Turnill, Blackrock

From the above post:

Dividend income is poised to become a larger component of lower overall portfolio returns over the next five years, BlackRock analysis suggests. Bond yields have likely bottomed out, and we don’t see scope for big rises in already elevated stock market valuations amid tepid earnings growth.

High-yielding dividend stocks typically suffer more when rates rise than dividend growers — quality companies with enough free cash flow to sustain dividend increases over time. Yet even many of these stocks could generate positive returns in a gradually rising yield environment. Thanks to the power of compounding dividends and earnings growth, valuations of global developed stocks would need to fall by roughly 30% over the next five years to generate negative returns for investors, our return assumptions suggest. We view this as unlikely.

So investors willing to hold income stocks for the long-term can take advantage of the current lower prices and add them in phases. Here are some stocks for potential investment:

Utilities: Consolidated Edison Inc. (ED), Southern Co. (SO), NextEra Energy, Inc. (NEE) and Duke Energy Corp. (DUK)

Consumer Staples: Kimberly-Clark Corp (KMB), General Mills Inc (GIS), Colgate-Palmolive Co (CL), Nestle SA (NSRGY), Johnson & Johnson (JNJ) and Kellogg Co (K)

Consumer Discretionary: Diageo PLC (DEO), Heineken NV (HEINY), British American Tobacco PLC (BTI),  and Anheuser-Busch InBev SA/NV (BUD)

Disclosure: Long NEE, GIS

Globalization: Impact on Global Exports and Ecnomic Growth

The exponential rise of globalization in the past few decades has created winners and losers. Some of the losers are workers in the developed countries.Winners include corporations, capitalists, farmers, etc, in these countries. In addition, one of the biggest beneficiaries of globalization is the millions of workers in developing countries.

As the middle-class workers in the rich countries saw their jobs disappear and wealth accumulate in the hands of a few, they are revolting against the elite. Brexit in UK and the Trump victory in the US are two outcomes of the public’s rejection of the status quo. An article in Der Spiegel published yesterday discusses the impact of globalization in detail. From the article:

End of Globalization?

Now, though, those who have lost out are striking back, first in Britain and now in the US. And Italy and France could soon join them.

It is a fact that globalization and free trade have increased global prosperity, but they have also increased inequality in the world’s wealthiest nations. They have made the biggest companies more powerful, because business operates globally while politics tends to be a local or regional affair, and made the world more vulnerable to crises, because everything is networked and the debts of American homeowners could lead the entire world to the brink of collapse.

 

global-exports-and-ecnomic-growth

In short, globalization is responsible for a host of problems that would otherwise not exist. And it is therefore in the process of gambling away the trust of people around the world. Already today, global trade growth has slowed and state interference is on the rise.

The world finds itself at a turning point. It must try to eliminate the drawbacks of globalization without destroying its advantages. If, on the other hand, protectionism and populism gain the upper hand, there is a danger that global prosperity could shrink. The age of globalization would be at an end.

Source: A Turning Point for Globalization – Inequality, Market Chaos and Angry Voters, Der Spiegel

The entire article is worth a read.

Readers may also want to checkout After Trump’s victory China is the main strategic pillar for globalisation by Prof. John Ross of Renmin University of China.

The key takeaway is globalization is in itself not bad. But when the benefits of globalization does not reach everyone especially the workers then they will turn against the system that was meant to raise their living standards.

Infographics: US National Parks

The US National Park Service (NPS) celebrated its 100th year anniversary on August 25, 2016. The creation of the great park system has been called  called “the best idea we ever had.” by the famous writer and environmentalist Wallace Stegner. Below is a neat infographics on the parks from the WSJ:

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us-national-parks-infographics

Source: How Economical Are Our National Parks?, WSJ, Aug 26, 2016

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Lake McDonald in Glacier National Park

Source: NPS

The National Park Service has a special web page dedicated to the celebration of the centennial which can be found here.

The Great Smoky Mountains national park receives the largest number of visitors in a year. I think this is because of the entertainment-related attractions like amusement parks that lie just outside the park.

Wealth Distribution Across Select OECD Countries: Chart

Wealth distribution or lack thereof varies across OECD countries. The US is the most unequal country in terms of household wealth distribution among the select countries shown in the chart below:

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wealth-distribution-in-oecd-countries

Source: OECD

The richest 10% of the Americans own more than 75% of the total household net wealth.Crony capitalism, regulatory capture, corruption and other factors have led to the situation where the largest share of wealth created is extracted from workers and channeled to the upper crust of the society. This is one of the reasons why the frustrated “deplorables”voted against the continuation of the status-quo as represented by the Democratic party.